Target set to reveal its plan to jump-start growth. Investors hope it will be enough.

All eyes will be on Target on Tuesday as the Minneapolis-based retailer unveils its latest plan to jump-start growth and recapture ground lost to competitors over the past few years.

Investor pressure is high. Target’s reliance on shoppers’ discretionary spending has put pressure on margins. Analysts are hoping for a strong reset in response to continued economic limbo.

“They’ve lost the plot a bit,” said Neil Saunders, managing director of GlobalData Retail. “They’re not being objective and blunt in their self-assessment.”

Previously hailed as the dominant “it” retailer among big-box players, Target led the industry in the years before the pandemic by reimagining how online shopping would play out in traditional retail. But after a tremendous bump in the COVID era, Target started to waver in the face of supply-chain disruptions, evolving buying patterns and inflation.

Target — known for combining convenience with a posh vibe that resonated with middle- and upper-income shoppers — has continued to take a beating. The retailer developed a reputation of playing catch-up with competitors Walmart and Costco, analysts say.

“Walmart continues to narrow the space between it and Target every day in terms of assortment and experience,” said retail strategist Toopan Bagchi, who was a top manager for both Walmart and Target. “They [Walmart] still hold the high ground on value, which is significant in an economy where consumers are watching their wallets, but they’re making smart moves.”

With its focus on getting customers to use more of their discretionary spending, Target is at the mercy of the economy, analysts said, and has not done enough to adjust. Meanwhile, Walmart has grown market share and profits.

“If Target can’t produce growth in this kind of environment, then it underlines that many of the problems it faces are internal rather than a result of the economy or consumer behavior,” Saunders said.

Target is expected to reveal its new plan for growth at its investors day in New York City Tuesday, which coincides with the release of Target’s fourth-quarter earnings. Preliminary holiday sales figures show store traffic rose 3% and same-store sales rose 2%. Yet analysts will focus on the quarter’s profit margins and its forecast for growth in the year ahead.

The company’s stock value will rise or fall on the strength of Target’s plan. Walmart led a wide decline of the stock market on Feb. 20 after it warned growth would slow this year because of economic uncertainty.

Both Walmart and Costco’s stock prices have risen steadily over the last three years while Target has undulated between peaks and valleys. It has struggled to maintain market share — industry terminology for the size of its slice of the retail pie — since its pandemic boom.

After Target missed expectations on its third-quarter earnings, the company’s stock plunged 21%, its worst single-day drop since May 2022. CEO Brian Cornell acknowledged the disappointing results but struck an optimistic tone about long-term growth.

Economic realities, like sticky inflation, continue to pummel middle-class morale, putting pressure on the Minneapolis-based retailer and its competitors.

A new analysis by Moody’s Analytics for the Wall Street Journal revealed nearly 50% of spending is done by the top 10% of earners — those making more than $250,000. That’s up from 36% three decades ago. Meanwhile, spending by working- and middle-class consumers has declined, highlighting a fundamental shift in purchasing power.

During that same period, Walmart made market share gains among higher-income shoppers — historically Target’s key demographic. As Target introduced bargain brands like Dealworthy, Walmart launched bettergoods, a private-label grocery brand replicating the quality and value that Target captured with Good & Gather.

At the National Retail Federation’s Big Show in January, Target’s Chief Commercial Officer Rick Gomez hinted at where the company is headed.

Target has cut the time it takes to launch a trending product from 27 to eight weeks, he said.

“The things that are trending that we’re seeing, that are going viral, that we want to be in-market ahead of the competition — we’ve created an operating model that enables us to do that,” Gomez said.

Target is also leaning into health and wellness throughout the store, from skin care to food and clothing.

In an interview recorded during the show and released last week on NRF’s podcast, Gomez did emphasize the need to continue improving.

“There’s been hiccups along the way and no doubt during economic tough times, Target will underperform Walmart,” Brian Yarbrough, senior analyst at Edward Jones said. “But Target’s play has always been to offer fashionable apparel and home items that will drive traffic and differentiate it from other retailers.”

Gomez said that will remain at the heart of Target’s strategy.

“One of the most important decisions that we make as an organization is what are we going to sell,” Gomez said. “It better be compelling, it better be on trend, stylish, quality, at an affordable price point. If we can’t do that, we won’t be successful.”

Last week, Target announced two new brand partnerships, one with Champion for athleisurewear, and another with Disney and Marvel brands for its Pillowfort home brand.

If people can’t differentiate Target from other stores, that’s a problem, said retail consultant Carol Spieckerman.

“Target considered itself a brand long before it became a place for brands,” said Spieckerman.

That now feels increasingly muddled.

While Walmart and Kmart focused on volume, Target cultivated a more selective consumer base. This identity long set it apart, making recent black eyes in regard to Pride merchandise and diversity, equity, and inclusion (DEI) initiatives feel out of character.

Customers have taken to social media, criticizing tech glitches, inventory issues and the pullback on DEI.

“It comes down to the whole brand experience of Target,” said Chris Walton, an omnichannel shopping expert and former Target executive. “The value of the products, the convenience and shopability of the stores, the helpfulness of the staff — together, that’s what makes Target.”

Longtime Target customer Mark Shaughnessy of Bloomington said he still shops there but finds stock inconsistencies frustrating.

“Their grocery prices can be competitive, especially produce, but as countless others have noted, it’s not unusual for them to be sold out,” he said.

Edith Stein of Edina quit shopping at Target in August when repeated glitches with her Circle card cost her the 5% discount.

Josh Kaplan of south Minneapolis is also now a former customer. Until recently, he said his family relied on Target for almost everything — from groceries to clothing.

“There’s almost no need they couldn’t meet for us,” Kaplan said, estimating his family spent more than $20,000 a year at Target.

But he stopped shopping there after the company rolled back its DEI commitments.

“Target’s commitment to social justice seemed as genuine as a massive corporation can be,” he said. “Rolling back those initiatives so quickly made it seem like they were just caving preemptively to political pressure.”

It’s not the first time the retailer has been a target for political protests.

In 2016, its transgender bathroom policy angered conservatives. In 2023, Target’s Pride collection drew backlash from both liberals, who saw its response as inadequate support for the LGBTQ+ community, and conservatives, who thought some items were inappropriate.

Yet Target recently reported better year-over-year “net promoter” scores for wait times at checkout lanes, satisfaction with team member interactions, ability to find products and cleanliness of stores. A spokesperson for Target said the company remains confident about the continued improvement of its store experience.

Analysts are also wondering whether Target’s online strategy needs a reboot. Other retailers have copied Target’s store-as-a-distribution-center model but have progressed further in online marketplaces.

Walmart’s investments in AI, automation and its highly profitable Walmart Connect advertising business have given it a significant edge, analysts said.

Retail success today hinges on convenience, aesthetics, and experience, said Oliver Chen of Cowen and Co. As Walmart enhances its in-store shopping and private-label lines, Target must evolve to stay competitive.

“As we move into 2025, the gap between Walmart and Target will significantly decrease,” said Yarbrough.

Slower inflation and wage growth gives Target an opportunity to rebound, analysts say.

Yet regaining momentum will require more than just riding out economic uncertainty, said Anne Mezzenga, co-CEO of Omni Talk alongside Walton.

It will mean taking Target’s strengths — its brand identity, curated product assortment and focus on design — and reinvesting in them.

“They were thinking about things the right way before many in the industry,” Mezzenga said.